Year-End Charitable Giving: What to Know for 2024

The end of the year is approaching, and you’re probably starting to think about your loved ones and giving thanks for what you have. One of the most impactful times of the year for charities to receive donations is near the end of the year when they need some extra help. It may be a good time to consider sharing the love with others and donating to a charity of your choice.

End-of-year charitable giving can also give you some tax benefits. Put these charitable giving tax strategies into effect before the end of the year.

Tax-Deductible Donations for Charitable Gifts

There are numerous limits on how much you can deduct, so be sure to talk to your tax advisor about your charitable donations. To claim a charitable donation on your taxes, there are certain requirements the donation must meet. Here are a few to consider.

• Donate to a Qualifying Organization. For a donation to be tax deductible, the donation must be made to a qualified organization. Qualified charitable organizations are organizations that qualify for tax-exempt status and support philanthropic, nonprofit or civic duties, according to the IRS. 
• Document Your Contributions. For tax filing purposes, it’s important to document your contributions to charitable organizations. You can provide proof in the form of a receipt or invoice from the qualified charity. Proof could also be provided by a credit card statement or other financial records detailing the donation.  
• Know Your Deadlines. For a donation to be eligible for a tax deduction in 2024, the donation must be received by 11:59 PM on December 31. To ensure tax deductibility, it’s encouraged you make any planned donations in advance of this deadline.
• Itemize Your Deductions. To receive a tax deduction for your charitable contribution, you must itemize your deductions, so the IRS can see what expenses should be taken out of your taxable income. 

Tax-Smart Charitable Giving Strategies to Increase Your Impact

A lot of people know that they can deduct their donations from their income taxes. By increasing your knowledge of tax planning strategies, you can maximize your impact. These charitable giving tax strategies can help you prepare for this holiday season. 

Prioritize Based on Taxable Events

Certain events can impact your tax liability. For example, realizing gains in the stock market or receiving income from rental property can push you into the next tax bracket this year. Charitable giving can help offset those earnings. 

Similarly, if you anticipate being in a higher tax bracket next year, you could defer these donations to January to help decrease your tax liability next year. 

Consider Bunching Gifts

If you are planning on making a charitable donation this year, it might benefit you to see if itemized deductions will push you above your standard deduction. If your itemized deduction will not be greater than the standard deduction, it may be good to consider the tax strategy of “bunching,” which means that you would combine multiple years’ worth of charitable contributions in one year to maximize your tax benefit. 

You could consider a donor-advised fund as a method of bunching. A donor-advised fund is a separately identified investment fund or account kept for the sole purpose of supporting charitable organizations you care about. By contributing multiple years’ worth of giving to the account this year, you could lower your tax liability this year while continuing to make the same size of annual gifts to the charities you support. 

Gift Appreciated Non-Cash Assets

Appreciated non-cash assets could be real estate, private business interests or even stocks. By contributing an appreciated asset held long-term, you’re usually donating a pre-tax asset, which can help you give more impactful gifts. This can also help eliminate taxable income and allow you to receive a larger tax deduction. 

Contribute From Your IRA

Once you turn 73, you are required to start taking required minimum distributions (RMDs), a required distribution from a qualified retirement account. RMDs are required each year and are counted as taxable income. 

Instead of putting RMDs into your account, you can transfer them to a charity through a qualified charitable distribution (QCD), furthering your giving goals and reducing your taxable income.  

Consider Charitable Giving in Your Estate Plan

You can help ensure your philanthropic wishes are met by adding charitable giving to your estate plan. Through a will or trust, you could gift funds to an organization or to a beneficiary. By using estate planning strategies like charitable giving, you could potentially reduce your estate tax liability. 

Share Your Wealth With Charitable Giving

Consider making annual gifts a part of your financial plan. Reach out to your local Farm Bureau agent or financial advisor to talk through your financial goals today.